If you’re building a startup, always sell BEFORE you build (here’s why)

[seekingtruth94]

I’ve met with a 800+ entrepreneurs in my career (VC + startup builder). Many have had an idea and raise money from friends and family before actually validating it by speaking with real customers. This almost always created huge problems later.

Please, save yourself the time and money and have customer conversations BEFORE you spend months building something you think they’ll buy.

More specifically, find some way to get a commitment from them. A commitment can be either money, time, or status.

• Money: they pay for it.
• Time: They want to meet again and will give you access to their team to discuss it more.
• Status: They’ll put their neck on the line for the idea. (E.g intro to their boss.)

How to get customer conversations:
I have a few go-to processes. The first that worked countless times for me (and I’ve done this at startups that have raised $100m+) is:
- Go to LinkedIn Sales Navigator and find your ideal customer.
- Use a tool like Snov.io and scrape their email.
- Send them a cold email telling them the idea you’re working on and that you’d be “really interested in hearing their perspective before you launch”.
(Also send them a LinkedIn request for good measure).

This path will validate the idea and save you a ton of time and money.

How do I know this works?
- The best pre-product startups we invested in at my VC fund had signed LOI’s from customers before they’d build anything. It was awesome.

• I launched a product at a startup that has raised $100m+. All I had was a deck (we couldn’t actually do what I was pitching). After 1.5 months of aggressive customer conversations a big insurance company agreed to a $250k+ contract (now a $1M+ product line 12 months later). This was after testing another idea that nobody would buy.
• I’m currently doing this with 2 startup ideas I am testing. I’ve spent $0. I don’t have a website built, I don’t have an MVP. All I have is a deck and custom domain from Google. I’m confident (70% chance) that w/in 2-4 weeks one of the ideas will be validated by someone giving me $ for it. That’s the one I’ll go with.

Of course this doesn’t work for every idea, but it does for most (B2B, consumer, courses, etc).

Check out the book The Mom Test. I’m sure you can find it free somewhere. It will save you from a ton of pain.

 

[paulus59]

@seekingtruth94 Friends, if you really want to practice the lean startup methodology and save yourself time, money, heartache, and humiliation, please don’t start with pitching and sales.

This is a very common mistake. It’s essentially rehearsing our already overwhelmingly strong confirmation bias.

There’s a very big important step before that called customer discovery. This is the phase where you investigate the problem, before imposing your solution, and just explore how people experience it, asking a wide variety of open ended questions to ensure you thoroughly understand it.

I’ve taught this and coached dozens of startups and hundreds of entrepreneurs, mostly through programs like Techstars Startup Weekend programs, incubators, and private consulting, and this practice — becoming the expert on the problem — is crucial. I’ve watched them struggle through it. I’ve done it myself many times. Most of the people who skip it or do it wrong (because they can’t submit to the process) struggle a lot more at several stages of their work.

Not learning to really listen to your customers is a huge disadvantage. Start there.

Best place to learn customer discovery / customer development is Steve Blank’s website. Lots of articles and videos there. All free. Learn it. Do it.

If you start by pitching, and selling, as this post suggests, you may very well find a customer, and then you can build it. Great. But if you don’t, and you often won’t, all your pitching and selling efforts will leave you with very little understanding of why you’re struggling to make a compelling and valuable offering.

 

[613jono]

@paulus59 Hey man thanks for the Steve Blanks website recommendation. It's really helpful.

 

[paulus59]

@613jono Any time, old buddy.

 

[roman101]

@paulus59 There’s a very good chance what you’re building is an existing product with existing g competition (very typical in marketplaces like Apple, Shopify, Wordpress, etc). In this case, you actually have a decent idea of what the the product needs to be like as well as customers who are willing to buy it. What I mean is that the product is mostly validated (like base features). Is there a reason still to talk to customers before building it as opposed to parallelizing talking to customers while building the product?

 

[paulus59]

@roman101 This is a great question. The answer is highly dependent on the specific details of a given opportunity. But generally, in this case, I'd make a case that customer discovery (CD) is even more important!

There are many things to gain from scrutizing your existing competition's online presence, marketing efforts, reviews, etc. — and you should absolutely do that exhaustively — but these also leave out an enormous amount of insight which comes via CD.

I think this question usually comes up, from folks that haven't done CD work yet, because we naturally fail to anticipate the range of insights which are gained through CD work. Once you've done it properly a few times, and put the insights to good use, it becomes obvious that you wouldn't have learned the same things with even the most detailed examination of a competitor.

Note also that I'm answering in the context of what I observe to be the majority of entrepreneurial interest in this particular subreddit, which is a little more innovative / startup style / perhaps corporate, and less traditional / main street / well known business models. In other words, if we're talking about opening a new location of a fast food franchise, we're not going to do the same type of customer interviews. But even in typically main street and small business cases, there are still many very valuable things to be learned from CD work.

So first of all, let's say someone has already beat you to market. Presumably, they've got their value/supply chain ironed out, have lots of customers, and are profitable. They have access to way more customer data, feedback, failed experiments, etc. They have a lot of advantages.

You have advantages too, maybe. And you want as many advantages as possible. And good CD work could just possibly be like a secret weapon that gives you an edge. However, you should probably assume that your competitor also did excellent CD and that doing it yourself is an act of catching up. Ha!

One category of the things we look for during CD is indirect competition. While direct competition is solving the same problem in the same way, indirect competition is effectively solving it in a different way. In my experience, most founders discover previously unidentified but significant indirect competition during CD. So these are things you wouldn't have even thought to search for and study! It's possible that a competitor has intentionally differentiated their offering from an indirect competitor in some way which you don't realize, because the alternate solution is not obvious to you. A lack of that knowledge could lead you to make a mistake in product design which makes your offering less appealing, and most folks will continue to do their little DIY solution instead, or buy your competitors. I hope that isn't too vague. I don't have time at the moment to produce examples, though there are many.

There are a lot of other aspects to a business model that are invisible, behind the scenes, which your competitor will have figured out through trial and error. These are harder to identify, but you can sometimes flesh out parts of them during CD.

When combined with the ability to work with narrative content, CD work is a powerful way to map out the stories through which our customers are living — feeling, thinking, talking, etc about the problem itself, about any solutions they've encountered, and even about secondary problems which have arisen when they've tried to solve it in the past. Adding a narrative component also helps discover powerful authentic language and imagery will can be incorporated into your product, brand, and marketing efforts. You can even discover patterns in customer thinking which influence your initial channel placements for ads or delivery.

Imagine if you discovered that most people would pay more than what a competitor charges for their product. And that there is some silly little feature that is overlooked, which people do want. You might find a way to position a better product at a higher pricepoint with better marketing... you see where I'm going?

I could go on for an hour about it, but hopefully something in this comment is enough to convince anyone reading that this is important. Some aspects of it should be done continually, in order to remain relevant. Learn and practice customer discovery!

 

[gladventist]

@roman101 I would love @paulus59 to respond to this

 

[paulus59]

@gladventist I did!

 

[gladventist]

@paulus59 Thank you sincerely for the knowledge, I am blind

 

[skyscepter]

@paulus59 This is great advice for all stages of the product design and development process. I've been through the ups and downs of doing this the right and wrong way in startups, but these days I use this approach leading product teams at a much larger company (they acquired my last company).

Talking to users/customers before you build something is crucial. We recruit people from whatever space we're working in who may or may not experience the problem we think we want to solve, they just need to be in the space in some capacity (but we of course gravitate towards subject matter experts). We try our best to go in with zero assumptions and just let them talk. It's more of an interview than user testing at this phase, we just want to get into a subject matter experts brain and let them tell us everything.

We'll then usually build a few different prototypes based on everything we learn during those interviews, maybe we do have a few assumptions at this point due to picking up on strong signals from multiple interviews, but it's still very open ended. These prototypes take very little time to put together because we have a robust design system we can pull from (early startups may not have this advantage).

After we've honed in on which direction feels like it's actually solving a problem or creating a new business opportunity, then we go deep and fully flesh out the product in design.

Then, and only then, do we actually build something. We might even do a few more user tests if we have time.

Sales would only get involved once we've gotten past the first or second round of prototyping, where we're feeling like we've got a good idea of where this is going, we're now just figuring out the small details. The idea that someone is selling something before putting in serious time with potential users is crazy to me.

 

[paulus59]

@skyscepter Agree 100% — great comment. The more you practice things like this, the more you find them useful in a wide variety of contexts.

I've also had a few opportunities to apply customer discovery techniques in the context of product development, and it has been consistently and highly rewarding.

If you combine all of this with an excellent understanding of narrative/story, and some tools for fleshing those out during interviews, you're going to mine pure gold.

Most product people are well versed in the stuff of user stories. Customer discovery for product development is essentially backing up and gathering authentic stories directly from potential users. It's a very natural fit.

 

[lil_sisa]

@paulus59 Yes, I believe so. Customer discovery is always the first step.

 

[aculturewarrior]

@paulus59 There’s a really good book that was provided to my entire team called “Testing Business Ideas” by a company named Strategyzer. It helped us immensely to make sure that we were focusing on the right problems / customer segments before dumping loads of money towards a potential solution!

 

[paulus59]

@aculturewarrior Yes, excellent book! I've given away at least a dozen copies now. Highly recommended.

I think of it like an introduction to hypothesis testing, and a little library of experiments we can use to test many different aspects of a business model. I love the way it evaluates the level of confidence provided by each test, and the cost of each test in dollars and minutes.

It's worth noting that there is very little overlap between these types of tests and the customer discovery I've been promoting in comments on this thread. At least theoretically, the tests in this book normally come after, sequentially. However, deep experience with a variety of both types of experimentation will lead to dramatic improvements in the execution of both, even if the main elements are quite different.

Author David Bland is a redditor as well (hi /@ibrahimm).

 

[seekingtruth94]

@paulus59 The book I recommended is a customer discovery book.

If you’re up for it, we can chat in real life. Id be interested in understanding your perspective.

 

[strugglingsinner1]

@paulus59 Customer discovery is the first part of sales?

 

[paulus59]

@strugglingsinner1 No, customer discovery is not selling.

At this stage, you often don’t even reveal in your conversations that you’re creating a solution to the problem.

This is pre-sales, pre-product, it’s almost pre-idea in the sense that this activity can dramatically affect rapid solution iterations.

At this stage, you’re mostly working through multiple hypotheses involved with thinking that you’ve found a problem worth solving, and asking lots of questions which test for that.

The questions we ask at this stage are of an entirely different nature than pitching or selling questions.

 

[zhekapr]

@paulus59 Serious question from a newb - is literally having leading chats with friends who would be the target customer? Moving on to som easy online questionnaires or polls? Or is that too basic? Thanks for your advice on this sub.

 

[paulus59]

@zhekapr Good question. That’s usually what our natural human psychological instinct is. It’s a good instinct in many contexts, but not for the kind of innovation most entrepreneurs here are after.

What you’re describing — talking this way with friends, etc — is essentially practicing, or rehearsing, “confirmation bias.” That’s bad. Confirmation bias, like the Dunning-Kruger effect, often leaves us ignorant to the point of making poor decisions and wasting resources. It’s the cause of many failed ventures. It’s also a hidden reason that many successful ventures aren’t far more successful.

Discovery techniques are designed to help us identify our many risky assumptions and investigate them effectively. The goal here is to discover things we don’t know, and even things the person we’re interviewing doesn’t realize. We investigate by mining the experiences of a large sample set of people who we hypothesize would be the customers for a solution. (That’s why it’s called customer discovery, but this is a bit of a misnomer; it should probably be called something more like problem investigation). We investigate primarily through a specific style/form/series of questions which focus on certain elements of past experience, not false present or future hypotheticals.

You can’t very well have a leading conversation with someone if you’re not allowed to talk about the future, and can’t mention that you’re considering solving the problem you’re researching.

Bad / poor customer discovery:

• leading conversations (which we do even subconsciously!),
• with people we know (whose compulsions are naturally to favor, or oddly, often to discourage us, as in the mother who wishes you’d just get a traditional career so she doesn’t have to worry about you),
• or through impersonal methods like online surveys, where it is nearly impossible for the subject to take you in a direction you hadn’t anticipated.

Note: Conversing with friends, entrepreneurial peers, and sometimes even family is wonderful! But it’s not a form of validation, and not part of customer discovery. Surveys and polls serve important functions elsewhere but are never substitutes for good customer discovery. Leading chats are important in other contexts but will they ruin your CD interviews.

It’s natural that ambitious entrepreneurs are well practiced in leading conversations, which is all the more reason we have to discuss this head on and bring extreme clarity. It’s counterintuitive — so much so that most people don’t fully see the importance of it until they’ve iterated through the process a few times, made a few discoveries, and light bulbs start going on. Then… they LOVE IT.

 

[zhekapr]

@paulus59 Wow thanks a lot for taking the time to reply. I've got to read up more before I even know what questions I should ask!

Thanks again.